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The Ecquire Blog

Work productivity tips and CRM hacks for the leading enterprise

June 2, 2012

Getting shares back from my cofounders [DANCE VIDEO]

When Ecquire was founded it was actually called Dropcard in an accelerator near UPenn’s campus. The technical co-founders at the time, Ariel and Anton, either had two years of school or a job they’d accepted ahead of them. So, unless what we truly had the next Facebook on our hands, that’s what they were going to do.

Paul and I continued to keep the startup – and the search for traction – going. New cofounders came and left, and the product changed dramatically several times. For their role in establishing the original company, Ariel and Anton kept a few percents each.

As the years went by, Ariel and Anton voluntarily reduced their shares out of recognition that Ecquire was getting further and further conceptually (and technologically) from Dropcard.

Four years later, Ecquire raised a seed round.

Ariel and Anton still owned 500 shares of stock each – 0.5% – and in Paul’s words, “our cap table f***ing scares people away.” So Paul and I decided to ask if they’d be okay relinquishing their shares entirely to keep our corporate structure simpler, cleaner, and reserve the stock for future employees we want to attract.

Now – stop for a second – I know how this might sound: ex-cofounders duking it out in a law firm conference room over the right to an idea…. but no, this was a bit different.

We offered to buy back their shares, but there’s one problem: our seed round was entirely convertible notes, so there was no valuation we could use. Secondly, it would be a shame to cut down our runway for non-operational expenses.

While I studied engineering in college, I had the fortune of taking one business class: Negotiations. I remembered that the best negotiators question what the demands are really about. They don’t see negotiation as a zero-sum haggle; instead, they look for opportunities to be creative.

I knew that Ariel and Anton weren’t chasing money (least of all out of a startup’s runway), and had always been transparent about what they thought was fair given the time elapsed since their contributions.

I figured that like any good friends, money would be nowhere near as valuable to them as having me act like an assclown in public.

So, I presented Ariel and Anton with a choice:

We could haggle over a valuation for the stock and buy it in cash

Pick a song and I will dance to it. In the middle of Tel Aviv’s busiest intersection. At its busiest time of the week.

I love creative ideas like this. It reminds me of another story, I cannot recall the company, where the CEO was arguing with a customer and turned everything around by making a friendly bet on a basketball game. That customer eventually became an investor in his company.